Lullaby Lane Bedding, Inc A)653%
B)1

Multiple Choice

Lullaby Lane Bedding, Inc.needs to determine the amount of growth the firm could experience without having to obtain external financing.The current sales level is $800,000, the net profit margin is 6%, and the dividend payout ratio is 40%.Assume the firm is currently operating at full capacity and all assets will increase proportionately with sales.Lane's current balance sheet follows:
$$\begin{array} { | l | r | l | r | } \hline \text { Cash } & \text { 30,000 } & \text { Accaunts Payable } & \text { 140,000 } \\\hline \text { Accaunts Receivable } & 90,000 & \text { Nates Payable } & 50,000 \\\hline \text { Inventaries } & 110,000 & \text { Lang-term Debt } & 280,000 \\\hline \text { Net Fixed As5ets } & 380,000 & \text { Camman Stack } & 40,000 \\\hline & \$ 610,000 & \text { Retained Earnings } & \text { 100,000 } \\\hline & & & \text { 3010,000 } \\\hline\end{array}$$

A) 6.53%
B) 1.09%
C) 11.97%
D) 13.50%